3 Ways MillerCoors Aims to Get Back to Growth
By Steve Holtz on Dec. 29, 2016CHICAGO -- Leadership change and uncertainty was a constant at MillerCoors in the past two years.
When former CEO Tom Long announced in February 2015 his plan to retire that June, the move came at a time when the company was losing more than 1 million barrels of beer sales per year.
Industry watchers theorized that leading a joint venture between the then Nos. 2 and 3 beer makers in the United States—SABMiller and Molson Coors, respectively—was a difficult balancing act.
“They’re not able to increase prices above inflation because their core brands can’t sustain it,” said Benj Steinman, president of Beer Marketer’s Insights, at the time.
The Board of Directors of MillerCoors brought in Gavin Hattersley, then chief financial officer of Molson Coors and former CFO of the joint venture, as interim chief executive and after three months, installed him permanently in the role in September 2015.
Just days later, beer behemoth Anheuser-Busch InBev submitted a bid to purchase SABMiller, throwing the joint venture off balance once again.
That deal closed this past October and led to Denver-based Molson Coors' acquisition of SABMiller’s portion of the MillerCoors joint venture and all of its beer brands in the United States.
And so, with Molson Coors now the sole owner of MillerCoors, the balancing act is gone, and Hattersley can get down to the business of getting sales volume back in the black, he told the Chicago Tribune in a recent Q&A.
"You don't have to be a rocket scientist to work out if you continue to lose 10 million barrels every eight years, you're not going to be around for much longer," Hattersley told the newspaper.
The current plan calls for stopping the volume decline by 2018 and returning to growth by 2019.
There have been some early signs of progress, such as flagship beers Miller Lite and Coors Light gaining market share, the newspaper said. And in just the past year or so, MillerCoors has taken a majority stake in four craft breweries through its craft and import division, Tenth and Blake Beer Co.
Hattersley talked about some of the strategies to get back to volume growth …
1. On domestic beers
“In the above premium, we're doing a few different things. We're buying some of the small craft local breweries. We've done four in the last year. And we're focusing on brands like Blue Moon and Leinenkugel's and the flavors, brands like Redd's (Apple Ale). ... In premium lights, we're not going to have any success if we don't get Miller Lite and Coors Light back in shape. And those two brands are as healthy as they've been in a very long time.”
2. On craft beers
“We wanted to fill a hole in our portfolio, so local and generally more hoppy, full-flavored beers was a gap in our portfolio. ... It's not a necessity that they play a national role or have the ability to be national, but it would be nice if one of them did one day become a more national play like a Goose Island or a New Belgium.”
3. On buying craft brewers
“It makes them part of the future success. They can benefit from the success of our organization going forward. The value of whatever stake they're left with will grow. It's bringing also an expertise into our organization that we haven't necessarily had. We are a big company. Sometimes creating an entrepreneurial spirit inside a big company is difficult. ... They learn from us and we learn from them."